Wils Grill was established in January, 2014, by John and Karl Shihanck who were students at the Northern Arizona University (NAU). Each of the partners invested $500 in the business. They also secured a low-interest loan from Johns parents, which was used in purchasing grilling equipment. The purpose of the company was to provide tasty, locally sourced food, and ready-to-eat food to two main markets; the NAU students who were in need of good, well priced and late night food, and organizers and customers at community events who wanted reasonably prices, cleans, and high quality street food. This paper seeks to critically conduct an external assessment of Wils Grill.
Porters five forces model provides an effective way of assessing Wils Grill competitive environment. The model provides an effective way of assessing the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, and rivalry among existing competitors CITATION Bra14 \l 1033 (Braun & Latham, 2014). The threat of new entrants is high because there are few barriers to entry into this type of business. For example, the initial capital requirement is low, the business does not enjoy economies of scale, and there are few legal requirements, such as a business permit and license. The bargaining power of suppliers is moderate. This is because there are several suppliers of the required inputs, but temporal and highly qualified labor could place unfavorable demands on the company. There is a high bargaining power of buyers because the companys products cannot be completely differentiated from those of competitors in the market. Customers can therefore easily switch to those products offered by other vendors. The threat of substitute products is high because there are many vendors that provide fast-food services in Flagship. The level of rivalry among existing competitors is low because there are few barriers to exit from the business.
A critical evaluation of the macro-environmental factors also helps to assess the external environment and its impact on Wils Grill. Such factors may include demographic, economic, legal, and technological factors. With regard to the demographic forces, the characteristics of the markets population present opportunities that can be exploited by Wils Grill. For example, the young generation that is represented by the NAU students provide a good market for the business products. Economic factors such as income levels of the target customers also favor Wils Grill. From the research conducted by the NAU marketing research students, it was found that 56 percent of the respondents were willing to spend at least $11 per person on a catered event. There are also legal requirements that have to be complied with, such as the need to have a valid business permit and license. There are also technological factors in the external environment that may present threats or opportunities to the business. For example, the increased use of social media provides an opportunity for the company to reach out to a large number of potential and existing customers at a low cost.
Exhibit 1: External Analysis
Porters Five Forces Model
Threat of new entrants High
Bargaining power of suppliers Medium
Bargaining power of buyers High
Threat of substitutes High
Rivalry among competitors Low
Demographic Young generation
Economic Income level and willingness to busy
Legal Business permit and license
Technological Social media marketing
Wils Grill is not the only company in the fast-food industry. There are other vendors, such as chicken lady and kabob guy. The fast-food industry is continuously shaped by a range of macro-environmental factors, such as demographic, economic, legal, and technological factors.
Braun, M. R., & Latham, S. F. (2014). Mastering Strategy: Workshops for Business Success. California, USA: Praeger.
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